Sec. 8506.208. DEFAULT PROCEDURES. (a) This section applies only to a default in:
(1) the payment of the interest on bonds as the interest becomes due and payable;
(2) the payment of the principal of bonds as they become due and payable, whether at maturity, by call for redemption, or otherwise; or
(3) the performance of an agreement made with the purchasers or successive holders of bonds.
(b) A resolution authorizing bonds and any indenture or agreement entered into under the resolution may provide that in the event of a default described by Subsection (a) that continues for a period, if any, prescribed by the resolution, the trustee under the indenture entered into with respect to the bonds authorized by the resolution, or, if there is no indenture, a trustee appointed in the manner provided in the resolution by the holders of 25 percent in aggregate principal amount of the bonds authorized by the resolution and then outstanding may, and on the written request of the holders of 25 percent in aggregate principal amount of the bonds authorized by the resolution then outstanding, shall, in the trustee's own name, but for the equal and proportionate benefit of the holders of all of the bonds, and with or without having possession of the bonds:
(1) by mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the bondholders;
(2) bring suit on the bonds or the appurtenant coupons;
(3) by action or suit in equity, require the authority to account as if it were the trustee of an express trust for the bondholders;
(4) by action or suit in equity, enjoin any acts or things that may be unlawful or in violation of the rights of the bondholders; or
(5) after such notice to the authority as the resolution may provide, declare the principal of all of the bonds due and payable, and if all defaults have been made good, then with the written consent of the holders of 25 percent in aggregate principal amount of the bonds then outstanding, annul the declaration and its consequences.
(c) Notwithstanding Subsection (b), the holders of more than a majority in principal amount of the bonds authorized by the resolution and then outstanding, by written instrument delivered to the trustee, are entitled to direct and control any and all action taken or to be taken by the trustee under this section.
(d) A resolution, indenture, or agreement relating to bonds may provide that in a suit, action, or proceeding under this section, the trustee, whether or not all of the bonds have been declared due and payable and with or without possession of any of the bonds, is entitled to the appointment of a receiver who may:
(1) enter and take possession of all or any part of the properties of the authority;
(2) operate and maintain the properties;
(3) set, collect, and receive rates and charges sufficient to provide revenue adequate to pay the items specified by Section 8506.154(b) and the costs and disbursements of the suit, action, or proceeding; and
(4) apply the revenue in conformity with this chapter and the resolution authorizing the bonds.
(e) In a suit, action, or proceeding by a trustee under this section, the reasonable fees, attorney's fees, and expenses of the trustee and of the receiver, if any, constitute taxable disbursements, and all costs and disbursements allowed by the court are a first charge on any revenue pledged to secure the payment of the bonds.
(f) The courts of the county in which the authority is domiciled have jurisdiction of a suit, action, or proceeding by a trustee on behalf of the bondholders and of all property involved in the suit, action, or proceeding.
(g) In addition to the powers specifically provided by this section, a trustee has all powers necessary or appropriate for the exercise of the powers specifically provided or incident to the general representation of the bondholders in the enforcement of their rights.
Added by Acts 2015, 84th Leg., R.S., Ch. 855 (S.B. 1162), Sec. 1.05, eff. April 1, 2017.
Text of section effective on April 01, 2017
Last modified: September 28, 2016